Turkey’s currency woes are likely to get worse

IN TIMES OF trouble, it is good to have something to lean on. For a currency this can be a central bank capable of keeping inflation at bay, or a stable and predictable government to reassure nervous investors. Since today’s Turkey has neither, its swooning currency, the lira, has had to look elsewhere for help. On December 20th President Recep Tayyip Erdogan announced an unorthodox plan to rescue Turkey’s economy from the crisis his policies have caused. It involves the government insuring some lira deposits against swings in the exchange rate.In the short term the scheme seemed to have worked. The day after Mr Erdogan’s announcement the lira staged a record rebound, quickly erasing a month’s worth of losses. Yet the main factor in the rally was not the deposit-insurance programme but the central bank, which spent billions of dollars from its shrinking reserves to buy lira. The currency’s recovery has bought some time for Mr Erdogan, who had been in deep political trouble. But it has only obscured, or even heightened, the risks to Turkey’s economy.